Analysis of current economic conditions and policy

Soft vs. Hard Data: US Economic Outlook Edition

Gavin Davies in the FT has an interesting article about how survey/sentiment based information and hard data have diverged. Here is a picture of US GDP, from the official BEA series (3rd release), Macroeconomic Advisers, and e-forecasting, as well as the Atlanta Fed nowcast.

There is a distinct flattening out — although it’s important to recognize the Atlanta Fed nowcast at 0.9% growth SAAR is considerably below, for instance, the 2.72% from the St. Louis Fed. Macroeconomic Advisers forecasts 1.0% for 2017Q1.

On the other hand, the indicators that the NBER Business Cycle Dating Committee looks at suggest continued growth (although all these variables are subject to revision, so I won’t “pull an Ed Lazear” and say “no recession”).

The industrial production data understates the improvement over the last few months. Manufacturing and mining production have been robust. Most of the IP weakness is in utilities. I consider the manufacturing and mining industries to be more cyclically sensitive.